Revisiting Apple's Stock: An Earnings Preview

The tech giant's earnings report could be the catalyst for a strong movement.

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Fall was a cooler season to be a short- or medium-term Apple, Inc. (NASDAQ:AAPL) investor and it was wise to book profits. The warnings came from a wide array of writers and proved prescient.

The first thing -- and the most important thing -- that I would like to point out is that investors can never lose sight of their own time frame. Your time frame is just that, and yet, so paramount: It is yours. So when you read or hear, currently on a daily basis, that Apple is a broken stock, just remember: It is broken on a daily chart, even on a weekly chart, yet on a monthly or higher frame, if you have owned and added to Apple for more than a CNBC minute, then your time frame points out to a perfectly fine technical chart, just a healthy correction.

I insist so frequently on tuning out the noise as a fundamental rule for trading. It applies to personal time frames, to personal stress levels.
If you are a medium-term holder in AAPL, things are dicey. If you are a long-term holder, things are still healthy (for now).

It does not mean it will not get dicey for long-term holders as well, but for the time being, it is a pause on a money machine.

The second thing, and almost equally important, is that a broken stock chart is different from a broken company. Frequently, they coincide. But there are exceptions, and for the time being, applying objective metrics of growth, market share, positioning, and cash reserves, Apple is not a broken company. It may or may not be slowing; it may or may not be losing an edge; but on objective metrics, all other things being compared to other companies, it remains impressive.

Thirdly, please keep in mind: We really do not know a thing about what Apple stock will do! No matter how you slice the fruit, it remains guesses and conjectures.

A friend and I were talking on Friday, and no one knows whether Apple will soon pull a Facebook (NASDAQ:FB) rip (from $19 to $28, when most commentators were calling for $19 to $15 and lower). We just don't know.

It took 15 days for Facebook to do the inconceivable: Rip 50% (November 16 to December 1). You will not find a single column about Apple being able to rip from $500 to $750 in the next 15 days, but the truth remains: No one knows. It could crater to $400 or slash through all guesses and expectations. It remains just that: guesses and expectations.

The only clear part of the equation? Apple is expected to report earnings on January 22, 2013, and they could be the catalyst for a strong movement. In the meantime, I wanted to relay my thoughts about AAPL stock to readers, along with providing a spreadsheet modeling Apple's upcoming earnings.

I will wrap up this column (let's call it a preview) by saying that the estimates in the spreadsheet are my own; on aggregate, I truly believe it was a good thing that Apple corrected and rebalanced. It was healthy and could provide fuel to another strong run for equities. See spreadsheet below.